I think this is a market that is going to struggle to find its footing.
The gold markets fluctuated during the trading session on Monday as the 200-day EMA continues to be a bit of a magnet for pricing, so it is not a huge surprise to see that we came back to this level. As you can see, this candlestick for the trading session is a bit of a hammer, so that does suggest that we could get a little bit of a bounce, but right now I think there is so much noise above that it is difficult to get overly bullish of this market. If we were to break out above the negative candlestick from the Friday session, then it is possible that we could go looking towards the $1860 level.
On the other hand, if we were to break down below the candlestick for the trading session on Monday, that opens up a trapdoor to lower pricing, perhaps down towards the $1750 level. That is an area that is a significant support level, and it is likely that we continue to see a bit of a fight in that area. If we were to break down below there, then it is likely we will go looking towards the double bottom underneath at the $1680 level. I do believe that area will be very supportive but breaking down below that level then even opens up the possibility of a drop all the way down to $1500.
At this point, it is worth noting that the US dollar has been strengthening, and that could have worked against gold early during the session, but we have since seen a bit of a bounce. This is not a huge surprise, considering that there has been a massive run towards safety. That being said, gold is only somewhat considered to be a safety trade, because if the bond market continues to attract so much attention, it is very likely the gold will probably “play second fiddle.” With that being said, I think this is a market that is going to struggle to find its footing, but if we do finally bounce and break above that gap above, then it is likely that we will go looking towards $1910 above, which opens up the possibility of a move towards the $2100 level after that.